1106005 Informal Interpretation

Michael Verne

– Agree.


June15, 2011

Mr.B. Michael Verne
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Re:Grantor Retained Annuity Trust

DearMr. Verne:

Weare emailing you to see if you agree with our views that the below describedtrusts (and not the grantor) would be the holder of voting securities ofCorporations A and B and unincorporated interests of Limited Liability CompanyC. In our transaction Buyer will purchase 100% of the voting securities ofCorporation A and Corporation B and 100% of the equity interests of LimitedLiability Company C for a combined acquisition price of approximately $115million. The acquisition price attributable to each individual acquired entityis less than $66 million. Please see the attached transaction overview. ThreeGrantor Retained Annuity Trusts ("GRATs") have been established byGrantor X. All of the GRA T agreements are relevantly identical. Grantor X iscurrently the sole trustee of each of the three GRATs. Each trust isirrevocable.

1) Each GRAT pays an annual annuity to Grantor X duringthe three-year term of each GRAT (the "Annuity Term"). We havereviewed Informal Staff Opinions 0606001 dated June 2, 2006 and 0601008 datedJanuary 11, 2006 and it is our understanding that the receipt of annuitypayments by a settlor of a GRAT does not constitute a "reversionaryinterest" for purposes of Rule 80L1(c)(3) and that Grantor X would not bedeemed to "hold" the assets of the GRAT by reason of that annuitypayment.

2) Although Grantor X has the power to substitutealternative property for all or part of the corpus of each GRAT havingequivalent fair market value, we understand that such ability to substituteassets in the corpus of a trust does not constitute a reversionary interest.

3) Currently Grantor X serves as the sole trustee of eachof the three GRATs. The Grantor cannot serve as a Trustee after expiration ofthe Annuity Term. Upon the expiration of the Annuity Term, each GRAT designatesindividuals, in descending order of priority, who are to serve as successortrustees. During the Annuity Term, Grantor X in his capacity as sole trusteecan also designate alternative successor trustees. We have reviewed InformalStaff Opinions 0604016 dated April 20, 2006 and 1006006 June 15, 2006 and it isour understanding that a settlor of the trust being able to name a successortrustee is not the equivalent of having the ability to replace trustees for HSRpurposes.

4) With respect to the power to remove trustees, eachGRAT agreement contains the following provision:

(1) The individual Trustees, acting together, or if none,a majority of the beneficiaries, shall have the right, at anytime and for anyreason, to remove any current or successor individual or corporate Trustee.Simultaneously with such removal, the Trustees removing the individual orcorporate Trustee, acting together, may designate a successor individual orcorporate Trustee. Notwithstanding the foregoing, the guardian of anybeneficiary who is notthen legally competent may exercise the power on behalf of such incompetentbeneficiary.

GrantorX cannot unilaterally remove a trustee. If a GRA T only has one trustee, thesole trustee can resign and appoint his successor as described above. To theextent additional trustees are appointed, a current or successor trustee may beremoved only with the unanimous consent of all trustees (if there are twotrustees) or by a majority of the trustees (if there are three or moretrustees). We believe that Interpretation Nos. 42, 44 and 58 contained in theABA SECTION OF ANTITRUST LAW, Premerger Notification Practice Manual (4th ed.2007) supports the premise that Grantor X does not control, for HSR purposes,the three GRATs. These interpretations state that when the power to designate areplacement trustee is shared or subject to the consent of a third party, noone person has the power to appoint 50% or more of the trustee and no oneperson would be deemed to control the trust.

Webelieve under the facts and circumstances as described above the filing of aPremerger Notification Form under the HSR Act will not be necessary as each GRAT will be deemed the owner of its securities as opposed to Grantor X.


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